SCM SIM a Unique Business Model Based on IR TOP RESEARCH Luisa Primi - [email protected] Transparency and Flat Fees T +39 02 89056957 - Via C

SCM SIM a Unique Business Model Based on IR TOP RESEARCH Luisa Primi - L.Primi@Irtop.Com Transparency and Flat Fees T +39 02 89056957 - Via C

FIRST COVERAGE 2017 FY Results – June 7th, 2018 6:00 p.m. Finance SCM SIM A unique business model based on IR TOP RESEARCH Luisa Primi - [email protected] transparency and flat fees T +39 02 89056957 - Via C. Cantù, 1 - 20123 Milano

COMPANY DESCRIPTION ______Target Price (Eu) 10.24 SCM SIM is a Private Banking and Wealth Management company Market Price (Eu) 9.20 authorized to manage portfolios, provide investment advice and Capitalisation (Eu m) 18 placement services. Enterprise Value (Eu m) 16 Since foundation in 2009, SCM SIM has experienced a rapid growth, (as of June 6th, 2018) both in terms of AuM (2010-2017 CAGR +55%), private bankers (+19%) and net fees (+52%). Thanks to a team of 35 private bankers, the AIM Positioning Company currently manages more than 500 customers for a total of 1,083 Eu million of AuM, of which 79% in advisory, 15% in asset Market Data (Eu m) Company AIM Italia management and 6% in insurance services. Capitalisation 18 70

Perf. from IPO -13% -1% FY 2017 RESULTS ______Free Float 11% 42% In FY 2017 fee income reached 7.9 Eu m, +14% yoy driven principally ADTT YTD (Eu) 3,403 87,160 by recurring investment advisory fees that reached 3.1 Eu m (+25% Source: Osservatorio AIM Italia and FactSet data as of June 6th, 2018 yoy ) and performance fees (+197%). AuM and net fees, grew by +3.4% and +3.0% yoy respectively. Fee expenses were 3.9 Eu m, +29.2% yoy mainly due to higher pay-out for private bankers with Results & Estimates high AuM. Cost/income ratio was of 109.6% (98.5% in FY 2016) but included certain one-off costs. The result of the year was a net loss of Key Figures (Eu m) 16A 17A 18E 19E 20E 0.3 Eu m vs. a break-even in 2016. Net cash was of 1.4 Eu m. AuM 1,047 1,083 1,260 1,523 1,924

Net fees 3.9 4.1 4.6 5.5 6.8 UNIQUE BUSINESS MODEL______Net fees/AuM 0.4% 0.4% 0.4% 0.4% 0.4% SCM operates with a business model that complies with the most Brokerage margin 3.9 4.1 4.6 5.5 6.8 modern market and regulatory logics. Flat fee, Independence, High Cost/Income ratio -98% -109% -103% -97% -88% Watermark without reset, consultancy and non-placement, make Pre-tax Profit (Loss) 0.1 (0.3) 0.01 0.3 1.0 SCM an innovative, avant-garde and unique company in the EBT/Brokerage margin 2% -7% 0.2% 6% 14% financial services market Net Profit (Loss) 0.01 (0.3) 0.01 0.2 0.6 Net Debt (Cash) (2.3) (1.4) (1.3) (1.3) (1.8) REFERENCE MARKET AND DRIVERS ______EPS (Eu) 0.004 (0.17) 0.03 0.10 0.33

Assets managed by private bankers in Italy have seen a steady Source: Company data (IAS/IFRS) for FY 2016-2017 and IR Top Research estimates for FY 2018-2020 growth over the last years and reached 792 Eu billion in September 2017 according to AIPB, the Italian Association for Private Bankers (+3.9% vs. 763 Eu billion at the end of 2016), for a total of more than one third of Italian GDP. The market share of private banking Peers Comparison structures, compared to the total financial assets of household, Market Cap/AuM (x) 18E 19E 20E reached about 23%. SCM SIM 1.4% 1.2% 0.9% Asset management peers 3.1% 2.9% 2.8% 2018-2020 ESTIMATES ______Discount/Premium to peers -55% -60% -67% Key growth drivers for our estimates are expansion of private bankers network and operational leverage. Main assumptions are: P/E (x) 18E 19E 20E . growth in AuM at a 2017-2020 CAGR of 21% to reach 1.9 Eu m in 2020. SCM SIM n.m. n.m. 27.5 . Net fees are expected to grow at a 2017-2020 CAGR of 19% up to Asset management peers 13.5 11.7 10.8 6.8 Eu m at the end of 2020, with a Net fees/AuM ratio stable of Discount/Premium to peers n.m. n.m. +154%

about 0.4%. Source: IR Top Research estimates for SCM SIM and FactSet data as of June 6th, 2018 for peers . Cost/Income ratio in 2020 should reach 88% (vs. 109% in FY 2017), n.m. = not meaningful thanks to operational leverage. . Break-even in 2018 with a net profit of 0.6 Eu m in 2020 with an EPS Performance of 0.33 Eu (2016-2020 CAGR of 209%). . SCM SIM is expected to remain cash positive with 1.8 Eu m in 2020. 1M 3M 1Y Absolute -4.2% -8.9% -16.3% Relative (FTSE AIM Italia) -4.0% -8.4% -13.9% VALUATION ______52-week High / Low (Eu)* 11.40 / 6.40 We set a target price of 10.24 Eu p.s. obtained by applying a DCF model with K =10.13% and g=2%). Source: FactSet data as of June 6th, 2018 E * Intraday

Please, read important disclaimer on the last page of this report. SHARE DATA Market AIM Italia Ticker Bloomberg / Reuters SCM IM / SCM.MI ISIN ordinary shares IT0005200248 N. of shares 1,909,880 Free Float 11.4% HPS Holding Partecipazioni Main Shareholder Societarie Srl (88.6%) CEO and General Manager Antonello Luigi Sanna SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

AIM ITALIA AIM Italia, the equity capital market for small growing companies, has grown significantly since 2013: as of June 4th, 2018 the listed companies were 103 for a total capitalisation of 7.0 Eu billion. Dimension 103 companies AIM Italia: 2009-2018 market dimension trend 7.0 Eu b of capitalisation 103 95

72 77 7,038

57 5,709 36

18 2,937 2,902 10 14 4 2,051 1,242 320 360 354 493

2009 2010 2011 2012 2013 2014 2015 2016 2017 Jun 2018

Capitalisation (Eu m) N. of Companies

Growth Since 2013 the number of IPO’s and the amount raised increased considerably: in 2017 a peak was 67 IPOs in 2015-18 registered thanks to the listing of 24 new companies and in 2018 there have been 10 IPOs. 3.9 Eu b of capital raised AIM Italia is more dynamic than the main market (MTA): in 2015-2018, 67 companies listed on AIM since 2009 Italia, 20 on MTA.

Since 2009, the total equity amount raised in IPO is 3.4 Eu b; including capital increases, warrant exercise and bond subscription, the capital raised is 3.9 Eu b.

AIM Italia: 2009-2018 market growth trend 22 22 24 15 11 10 4 6 4 3 1,262 1,141

278 160 206 208 22 36 59 9

2009 2010 2011 2012 2013 2014 2015 2016 2017 Jun 2018

Capital Raised (Eu m) N. of IPOs

Performance Thanks to the introduction of PIR (Piani Individuali di Risparmio, the italian equivalent of UK lndividual FTSE AIM Italia +20% since Savings Accounts), all the indices highlight positive trends: FTSE AIM Italia has grown by +20% since 2017 2017 vs. -16% in 2016. FTSE Indices: 2016 vs. 2017-2018 trend (post PIR) 2016 2017 - June 4th 2018 36%

28%

18% 20% 14%

-4% -8% -10% -16%

FTSE MIB FTSE MID Cap FTSE STAR FTSE Small Cap FTSE AIM Italia

Liquidity Improving market liquidity after the introduction of PIR: Average Daily Traded Turnover (ADTT) strongly ADTT in 2017 was 120 Eu k vs. increased in 2017, with an average value of 120 Eu k (5.1x 24 Eu k in 2016). Total Traded Turnover (TTT) 24 Eu k in 2016 in 2017 amounted to 2.0 Eu b, 6.7x 295 Eu m in 2016. Average Daily Traded Turnover (Eu k) Total Traded Turnover (Eu m) 147 1,984 120 105 86 92

64 61

24 295 166 169 116 191 101 13

2016 2017 Jan Feb Mar Apr May Jun 2016 2017 Jan Feb Mar Apr May Jun

2 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

AIM ITALIA BY SECTOR The most important sectors in terms of number of companies are: Finance including SPACs (25%), Manufacturing (16%) and Media & Entertainment (15%); main sectors in terms of capitalisation are Finance (37%), Manufacturing (20%) and Chemistry (10%).

AIM Italia: breakdown by Sector Finance is the main sector in N. of companies Capitalisation terms of n. of companies (25%) and capitalisation Finance 25% Finance 37% (37%) Manufacturing 16% Manufacturing 20% Media & Entertainment 15% Chemistry 10% Energy & renewables 12% Technology 7% Technology 11% Energy & renewables 6% Services 7% Food & Beverage 5% Healthcare goods & services 6% Healthcare goods & services 5% Fashion & Luxury 4% Media & Entertainment 5% Food & Beverage 4% Services 2% Chemistry 1% Fashion & Luxury 2%

Telco 1% Telco 0%

Best share performance Chemistry is the sector with the best share performance since 2017 (+150%), followed by Services since 2017: Chemistry (+68%) and Finance (+44%). (+150%) AIM Italia: average 2017-June 4th, 2018 share price performance 150%

68%

42% 44%

24% 14% 17% 17% 1% 4%

-10%

Telco Finance Services

Chemistry

Technology Manufacturing

LuxuryFashion & Beverage & Food

renewables Energy &

Entertainment Media&

servicesHealthcare & goods In 2017 Food & Beverage had the highest level of average revenues (100 Eu m), followed by Best yoy 2017 revenues Manufacturing (80 Eu m). Excluding Chemistry (represented by 1 company), the best growth yoy was growth: Healthcare (+25%) realised by Healthcare goods & services (+25%). The sector that registered the highest level of

indebtedness (37.2 Eu m) was Energy & renewables.

AIM Italia: average 2017 financial data

Revenues YoY Revenues EBITDA margin NFP (Cash) NFP/EBITDA Sector growth (Eu m) (%) (Eu m) (x) (%)

Chemistry 11 +114% 62% (24.2) (3.6) Energy & renewables 37 +14% 21% 37.2 16.7 Fashion & Luxury 36 +4% 9% 5.9 0.6 Food & Beverage 100 +3% 5% 19.0 0.4 Healthcare goods & services 66 +25% 18% 16.2 1.8 Manufacturing 80 +7% 11% 14.3 1.2 Media & Entertainment 25 -1% 2.5% 7.3 1.3 Services 17 +21% 15% (0.1) (0.5) Technology 24 +17% 14% 0.2 1.5

Telco 7 +4% 42% 4.5 1.6 AIM Italia 41 +11% 13% 11.5 1.0

Average 2017 EV/EBITDA Excluding Chemistry (represented by 1 company), the first sector in terms of average capitalisation is multiple: 13.6x Finance (101 Eu m), followed by Food & Beverage (96 Eu m). In terms of 2017 EV/EBITDA multiples, Energy & renewables shows the highest value (18.6x), followed by Technology (17.0x). AIM Italia: average market data

Market Cap Free Float ADTT YTD 2017 EV/EBITDA Sector N. of companies (Eu m) (%) (Eu) (x) Chemistry 1 695 37% 1,478,942 n.m. Energy & renewables 12 36 26% 36,994 18.6 Fashion & Luxury 4 28 21% 23,558 8.6 Finance 26 101 71% 104,505 n.m. Food & Beverage 4 96 46% 106,048 4.7 Healthcare goods & services 6 63 30% 57,581 11.9 Manufacturing 16 87 33% 94,496 15.7 Media & Entertainment 15 22 31% 32,285 9.5 Services 7 23 26% 47,451 11.6 Technology 11 46 39% 76,762 17.0 Telco 1 18 43% 49,377 8.2 AIM Italia 103 68 42% 84,387 13.6 Source: Osservatorio AIM and FactSet data as of June 4th, 2018 * 32% as median value n.m. = not meaningful

3 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

REFERENCE MARKET In Europe total Assets under Management (AuM) have not ceased growing since 2008 and reached a record high of 22.8 Eu trillion in 2016 (138% of European GDP).

European AuM trend European AuM by countries (2015) (2006-2016, Eu trillion)

22.8 21.5 20.3 Rest of 17.6 Europe 16.0 Denmark 17% 14.3 2% 13.5 14.0 12.9 12.6 Italy UK 36% 10.8 5% Netherlands 6% Switzerland 7% France Germany 18% 9% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Other 19% Insurance companies Bond 27% 42% 2015 Retail Institutionals Pension

27% 73% funds 27% Banks Equity 32% 2% Other institutionals 18% Cash / Money market instrument 7%

Source: EFAMA, Asset Management in Europe, 8th Annual Review Facts and figures, April 2015

The Italian asset Also the Italian asset management industry has experienced a long period of growth and is now one management industry is of the largest and most dynamic across Europe. In 2016 total AuM accounted for 111% of GDP, experiencing a long period breaching for the first time the GDP threshold, up from the far lower 57% of 2011. of growth and is now one of the largest and most With an exceptional CAGR of 11.8% over the past five years, AuM in Italy reached 2,089 Eu billion at dynamic across Europe the end of 2017. This amount is almost equally divided in funds (mostly open-ended funds) and discretionary mandates, which are targeted either to HNWIs or to institutional clients, such as pension funds and insurance companies. According to Assogestioni, total AuM within funds was 1,027 Eu billion at the end of 2017, most of which invested in open-ended funds.

The Italian asset management market (2009-2017, Eu b)

2,089 1,944 1,833

1,588 1,062 1,330 950 898 1,195 1,007 731 950 938 599 525

477 502 462

993 1,027 857 935 670 731 473 505 476

December December December December December December December December December 2009 2010 2011 2012 2013 2014 2015 2016 2017

Mandates Funds Total

Source: Assogestioni – «Il mercato italiano del risparmio gestito» (update as of March 2018)

4 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

Compared to other main European countries, the Italian market is quite active. Considering AuM/GDP as a proxy for the activity of the industry and excluding the United Kingdom, which has historically been the most advanced place with regards to assets and wealth management, Italy is positioned behind only France.

Net flows (2012-2016, Eu b) Average AuM/GDP between 2013 and 2015 Net flows/AuM (%) (%)

133 141 299%

8.4% 7.7% 62 56 4.7% 160% 2.9% 97% 72% 81% (12) 62% -1.0% 2012 2013 2014 2015 2016

Net flows Net flows/AuM Belgium Netherlands Germany Italy France United (Eu billion) (%) Kingdom

Source: Deloitte – Asset Management in Italy: a snapshot in an evolutive context (May 2017)

Italian savers are well-known for their risk-aversion and their preference for safer financial instruments, such as deposits, government bonds and real estate. Yet, the macroeconomic environment, characterized by low or negative interest rates on traditional securities, has proven to be the major catalyst for the asset management industry in the last few years. It is of crucial importance to dig deep into their specific investment needs: low risk seekers and poorly financially educated, Italians need to have a personal relationship with their advisor. Baby boomers, who owns the largest share of the Italian financial wealth, are the foremost target of the industry. One third of Italians’ wealth is still parked in deposits and cash, representing an untapped potential for the asset management industry, that in the future will need to move these resources within its boundaries.

Household financial portfolio breakdown in Italy (1995-2016, Eu b and %)

5.2% 4.0% 4.0% 4.3% 4.2% 4.0% 4.0%

9.3% 10.5% 14.2% 18.2% 18.3% 20.7% 21.9% 5.8% 16.9% 11.0% 7.8% 7.7%

19.2% 11.0% 11.5%

19.7% 19.4% 28.2% 29.3% 23.8% 22.0% 22.5%

19.6% 19.2% 9.9% 8.7% 19.0% 16.5%

38.0% 30.4% 31.2% 30.6% 31.9% 22.8% 23.6%

1995 2000 2005 2010 2012 2015 2016

Currency & deposits Bonds Stocks Investment funds Pension funds and life premia Other financial assets

Although in continuous growth, managed assets (mutual and pension funds and life insurance products) in Italy still fall behind other developed countries.

Pension Other Total Assets Currency & Investment 2016 data Bonds Stocks funds and financial (Eu b) deposits funds life premia assets Italy 4,168 31.9% 8.7% 22.0% 11.5% 21.9% 4.0%

France 5,102 28.1% 1.3% 20.7% 5.7% 37.6% 6.6%

Germany 5,757 39.3% 2.8% 10.5% 10.1% 30.8% 6.5% United Kingdom 7,646 24.0% 1.7% 8.3% 2.2% 60.0% 3.8% United States 71,604 13.7% 5.6% 35.9% 10.4% 32.1% 2.3%

Assogestioni – Il mercato italiano del risparmio gestito (update as of March 2018)

5 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

FOCUS ON PRIVATE BANKING IN ITALY Private Banking is a type of banking service offered to a specific target of customers with complex needs and that requires an advanced service of financial consultancy for a personalized, efficient and performance management of their wealth.

Assets managed by private bankers in Italy have seen a steady growth over the last years and reached 792 Eu billion in September 2017 according to AIPB, the Italian Association for Private Bankers (+3.9% vs. 763 Eu billion at the end of 2016), for a total of more than one third of Italian GDP. The market share of private banking structures, compared to the total financial assets of household, reached about 23%.

Evolution of AuM in private banking in Italy (2007-September 2017*, Eu b and yoy growth)

792 763 726

40.8%

516 481 439 446 422 387 409 363

12.6%

7.3% 7.8% 7.3% 5.8% 5.1% 3.9%

-4.0% -6.0%

Source: AIPB – «Analisi del mercato servito dal Private Banking in Italia» (data as of September 30th, 2017) * Change of perimeter between 2014 and 2015

With half of all Italian private According to a study created by AIPB and the Boston Consulting Group («Il private banking nel wealth managed by retail mondo», November 2017) the Italian private banking industry has reached a good degree of banks, there is huge maturity with constant growth and high penetration of this service among the most affluent Italian potential for private banks families. Italy is the European country with the highest penetration rate, equal to 86% on the Italian to expand domestically HNWI wealth, equal to 1,029 Eu billion in 2016 (2009-2016 CAGR: +2.6%). However, only 12% of AuM are managed with an advanced consultancy model, characterised by a wide range of products and services offered, portfolio advisory and continuous monitoring, compared to 19% globally and is expected to increase up to 27%, with the growth of customer awareness on real added value.

Italian private banking customers have peculiar characteristics such as high financial availability (measurable through income and ability to save income, for example owning properties of property without mortgage), the ability to understand the contents of the service, inferable through schooling and/or profession and a wealth exceeding 500,000 Eu. In Italy, where wealth is generally distributed across the central and northern regions, the total wealth of households that have financial assets in excess of 500,000 Eu was about 1 Eu trillion in 2016, after an increase compared to 1.09 trillion at year- end 2015.

The most important feature of the Italian market is the significant number of entrepreneurs, who mainly control small and medium-sized enterprises (SMEs). Entrepreneurs express a variety of attitudes when choosing wealth managers. On the one hand, they prefer institutions that have a local presence. On the other, they recognise that solidity, expertise and greater confidentiality can make major international players more desirable. Most notably, many family-based enterprises consider family offices to be the best at managing the needs of a large client group with extensive financial, real estate and business assets. In such cases, wealth management must be dedicated and highly personalised, yet this can be difficult for some private banks given the limitations of their existing operating models.

6 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

COMPETITIVE LANDSCAPE The private banking battlefield in Italy is dominated by few big fighters part of commercial Italian banks or foreign investment banks, who share part of the arena with smaller independent players. According to Magstat, 91.8% of AuM are in the hands of 121 private banking operators thanks to the consultancy of 13,928 private bankers distributed in 2,509 subsidiaries for 1,140,000 of customers, while 8.2% belong to 134 family offices.

Top 10 players of private banking in Italy (AuM in Eu b and % of the total) 145.7

16.8%

64.0

7.4%

34.6 33.2 32.8 32.0 29.2 24.7 23.0 22.2 4.0% 3.8% 3.8% 3.7% 3.4% 2.8% 2.6% 2.6%

Fideuram UniCredit Aletti Bank UBS Europe BNL PNP UBI Top Banca Deutsche Cordusio FinecoBank Intesa PB Paribas PB Private Generali PB Bank SIM WM SanPaolo (UnICredit)

Source: Magstat

With total AuM of 145.7 Eu billion, Fideuram Intesa Sanpaolo PB is market leader, followed by UniCredit PB with 64 Eu billion (to be added, at group level, the 23 Eu billion of Cordusio SIM and the 22.2 Eu billion of FinecoBank for a total of about 110 Eu billion). Third is Aletti Bank (group counter Banco BPM) with 34.6 Eu billion.

The industry appears rather concentrated as the share controlled by these first three operators is 28.1% and in absolute terms exceeds 244 Eu billion. In the fourth place there is UBS Europe with 33.2 Eu billion, followed by BNL BNP Paribas P.B. with 32.8 Eu billion. The first 5 operators have over 310 Eu billion, equal to 35.7% of the total market, the first 10 players cover 50.8% of the market with 441.3 Eu billion and the first 20 hold a share of 69.7% with 609.7 Eu billion.

When analysed according to size it can be highlighted that there are 12 big players, i.e. those with assets over 20 billion, which hold a share of 55.5% equal to 482.4 Eu billion, 17.7% of the market is in the hands of players (11) with assets between 10 and 20 billion (total AuM of about 154 Eu billion; 10.1% (88 Eu billion) is instead controlled by about 15 private banks with AuM between 5 and 10 Eu billion. The boutiques with assets from 1 to 5 Eu billion are about 45 and hold together 108 Eu billion (12.4%), whereas the just under 100 smaller operators (assets up to 1 Eu billion) have total aggregated AuM of just over 37 Eu billion, 4.3% of the total.

SCM SIM’s main competitors are in our view specialised players, that together cover about 12% of the total market. The most important in terms of AuM are represented in the table below:

AuM SCM SIM’s main competitors (Eu m) Banca Esperia (MedioBanca Group)* 18,079 Ersel** 15,700 Banca Patrimoni Sella & C. 12,709 Kairos 12,000 Banca Euromobiliare (Credem Group)* 10,262 Banca Leonardo (Crédit Agricole Group)* 7,809 Banca Intermobiliare di investimenti e gestioni SpA 7,424 Banca Profilo 6,324 Cassa Lombarda 5,008 Banca Cesare Ponti SpA (Carige Group) 2,245 Banca Federico Del Vecchio SpA (UBI Banca Group)* 585

* 2016 data ** data as of March 31st, 2018 Source: IR Top elaboration on companies’ data

7 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

SCM SIM’S POSITIONING SCM focuses on the higher-end of the market (high net worth individuals, HNWI) with average AuM per client of about 2 Eu m and a partially customised service level.

Office Family 6

m) (Eu High net 4 worth individuals 3 (HNWI)

2 clientperportfolioAverage Affluent

1 Mass market

0 0 100 200 300 400 500 600 700 Average n° of clients per private banker

Source: Company’s Investor presentation

client the Dimensionof

Advisors networks

Traditional

banks

Level of the service Office marketMass Affluent Family HNWI

Standardised Standardised by clusters Partially custumed Custom made

Source: Company’s Investor presentation

MiFID II COMPLIANT In Italy the Markets in Financial Instruments Directive (MiFID) II (2004/39/EC) came into force on January 3rd, 2018 with the aim of increasing transparency in the industry. Market players have to SCM SIM is MiFid II disclose detail on fees, costs, services offered and conflicts of interests. compliant since 2010 As SCM SIM is by own choice MiFID II compliant since 2010, in order to guarantee a high level of safety as well as maximum transparency the new regulatory environment has not had an impact on SCM SIM’s business model, and the Company has hence found itself with a competitive advantage compared to other market players.

8 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

COMPANY PROFILE Founded in 2009 on the initiative of Antonello Luigi Sanna, the current Chief Executive Officer, and listed on AIM Italia since July 2016, Solutions Capital Management SIM SpA (SCM SIM) was the first SIM to be listed on the Italian stock market. SCM SIM is a Private Banking and Wealth Management company authorized to manage portfolios, provide investment advice and placement services. The Company offers customised advisory solutions, applying a unique, innovative and sustainable business model in Italy, which is based on independence, transparency and the absence of conflicts of interest, in line with the “fee only” advice model.

Thanks to a team of 26 employees and 35 financial advisors (private bankers), SCM SIM manages more than 500 customers for a total of 1.1 Eu billion of assets under management (AuM), of which 79% in advisory, 15% in asset management and 6% in insurance services.

AuM growth (2010-2017, Eu m) FY 2017 AuM breakdown by business unit N° of private bankers (♦) (1,083 Eu m)

1,083 1,047 CAGR +55% 947 Insurance 6% 30 Asset Management 683 27 15% 23 456 309 17 Advisory 79% 50 148 12 11 8 9 2010 2011 2012 2013 2014 2015 2016 2017

In addition to its headquarters in Milan, the Company has offices in Bergamo (Lombardy), Piacenza (Emilia Romagna), Rome, Latina (Lazio); furthermore, SCM SIM is authorised to operate in the United Kingdom. The Company is supervised by CONSOB Bank of Italy and Borsa Italiana (the Italian Stock Exchange).

BUSINESS MODEL Since foundation SCM SIM’s is operates with a business model which is unique for the Italian market and based on the Anglo-Saxon Wealth Management model, characterized by:

1) Independence . No relationships with issuers of financial products: SCM SIM chooses the financial instruments autonomously, without constraints, exclusively taking into account customer’s needs and risk profile; . No rebates: The Company does not receive rebates (i.e. commissions paid by the issuer to the intermediary), but only fees from clients, thus guaranteeing the maximum transparency on the fees’ size without changes during assets management;

2) Transparency: all customers know exactly how much they pay and what products they have in their portfolio. . “High watermark no reset”: SCM SIM applies performance fees only when there are positive returns, as a sort of incentive for the Company to do well. Unlike many competitors, SCM SIM does not take commissions if the assets have not actually increased compared to the previous level. In jargon, this is called “high watermark“, which is the sign left by the water indicating the maximum point reached by the tide. In the same way, SCM SIM does not apply performance fees for levels already achieved; . safety: the Company, separating money from those who manage it. SCM SIM doesn’t hold, even temporarily, customer assets, that are deposited at a depositary bank (as of today, UBS Italia SpA).

3) No conflict of interests . SCM adopt a “flat fee” policy and fees paid to SCM SIM are hence independent of portfolio choices and selected products. In fact, since its foundation Company’s customers haven’t paid a fee on the financial instruments they buy, but rather the advisory service, that is an activity on the whole assets and not on the single asset class. This is a choice aimed at eliminating the conflicts of interests, since the intermediary normally earns in proportion to the fees, that are usually related to the product or service you are buying. Recall that MIFiD II established that the advice is real only if you do not receive compensation from the recommended services.

4) Customised approach: SCM SIM is highly focused on clients and it customises every relationship.

9 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

SERVICES 1 ) FINANCIAL ADVISORY (79% of total AuM and 57% of total recurring fee income) Consulting services on all or part of the client’s savings. The portfolio can be managed by other advisors, leaving SCM SIM to merely provide recommendations, with no access to the client’s liquidity .

MiFID Investment Consulting The MiFID Investment Consulting is a customised advisory provided after a careful analysis of the client's risk profile and his/her objectives. The choice of securities is carried out by SCM SIM’s Investment Department, that transmits the portfolio to the customer, who has the freedom to transmit the order to the bank in full or to execute only a part of it.

Wealth management and Life Planning Wealth Management area was set up in December 2010 and is destined for private bankers with high -standards clientele, according to the Family Office business model. "Wealth Management" identifies a broader approach to money management: it analyses and observes the family dynamics and their evolution over time, in order to identify the most efficient behaviours for the preservation and the development of the lifestyle of those concerned. It’s a highly developed attitude in the Anglo-Saxon world, but relatively new in Italy.

Family Business & Dinasty Planning The concept of heritage is by its nature linked to a single individual or to more families connected to each other by different interests. Organising the heritage with the maximum safety and legal flexibility over time and orienting it appropriately to the needs of the individual/families are prior over its financial allocation, which represents a second phase. The awareness of being covered by many or all the risks and the tranquillity of having thought almost everything that relates to heritage and its growth over time indirectly increase the life quality and lifestyle of a person.

General Advice Risk management, value at risk calculation and asset allocation assessment.

2 ) ASSET MANAGEMENT (15% of total AuM and 20% of total recurring fee income) SCM SIM is authorized for the negotiation of financial assets on behalf of its clients. The Company does not hold any cash from clients, who use independent depositary bank accounts and it does not have the right to transfer/withdraw any amount. SCM SIM is only allowed, if previously authorized, to negotiate securities and other financial instruments.

SCM SIM has 11 management lines for different needs and for different risk profiles. The management lines differ in terms of risk, measured through volatility, and target return; obviously, a higher expected yield corresponds to greater risk. SCM SIM doesn’t use derivatives and uses a 1:1 leverage, which means the Company does not short sale nor gets into debt to do asset management.

In line with strategic guidelines to widen product offering, in January 2018 SCM launched “Stable return” , a SICAV of the Company’s Maltese open-ended investment company, that has started to collect investments in the last months.

SCM SIM’s current Management lines Wealth Performance in # management Description 2017 line (vs. benchmark) Slow but regular growth of AuM in the very short term. It’s a line suitable for customers 1 Euro short-term n.a. with a low risk profile. Benchmark: 95% MTS BOT; EONIA 5%. Gradual growth of AuM in the short term. The Line is suitable for customers with a +2.44% 2 Euro coupon medium-low risk profile. Benchmark: JPMorgan EMU Bond Index 1 to 3 years 95%; (vs. -0.29%) EONIA 5%. Gradual growth of assets over the medium term. The Line is suitable for customers with +5.10% 3 Moderate a medium risk profile. Benchmark: MSCI World Local Currency 20%; JPMorgan EMU (vs. +4.35%) Bond Index 1 to 3 years 75%; EONIA 5%. Increase of AuM in the medium to long term. The Line is suitable for customers with a +6.72% 4 Revaluation medium-high risk profile. Benchmark: MSCI World Local Currency 45%; JPMorgan EMU (vs. +9.13%) Bond Index 1 to 3 years 35%; IBOXX Corporate BBB TR1-3 15%; EONIA 5%. Increase of AuM over the long term. The Line is suitable for customers with a high risk +7.96% 5 Dynamic profile. Benchmark: MSCI World Local 70%; JPMorgan EMU Bond Index 1 to 3 years (vs. +12.94%) 15%; IBOXX Corporate BBB TR1-3 10%; EONIA 5%. Increase of AuM in the very long term. The Line is suitable for customers with a very +10.22% 6 Aggressive high risk profile. Benchmark: MSCI World Local 90%; JPMorgan EMU Bond Index 1 to 3 (vs. 15.55%) years 5%; EONIA 5%. Increase of AuM over the medium term through the use of bonds with different +3.00% 7 Ladder maturities, through the reinvestment of the same and the related coupon flow. The (vs. +0.13%) Line is suitable for customers with a medium risk profile. Benchmark: 100% LIBOR + 0.5%. Increase of AuM in the medium term. The Line is suitable for customers with a medium to high risk profile. Benchmark: the Line has no asset allocation restrictions and is not +6.17% 8 Flexible conditioned by any specific risk factor, therefore it is not possible to identify a (n.a.) benchmark representative of the Line's investment policy. Target return: 100% EONIA TR (BBG ticker: DBCONIA Index) + 200 bps. Exclusively bond based Line. This line seeks an appreciation of the assets in the +3.78% 9 High yield medium term. The Line is suitable for investors with a medium-high risk profile. (vs. 3.70%) It mainly invests in small / mid caps listed on the Italian market, with a bottom-up 10 I.T.A. n.a. value approach. New management line recently released. The strategy gives full market exposure, while being active and delivering superior risk-adjusted and total return. It focuses on 11 MDOTM n.a. forecasting the variance-covariance matrix, to constantly improve the portfolio eﬃciency. Real Sigma operates on the components of the SXXE Index. Source: data provided by Company’s management n.a. = not available

10 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

INVESTMENT APPROACH The investment strategy is determined by a top down approach:

Board of Directors

Defines the strategic and tactical asset allocation, the related risk profiles of the management

lines and the investable universe in management and in consulting

Investment Committee Made up of 7 members, analyses the performance of the management lines and in consultancy and proposes to the BoD the financial instruments for each line

Investment Area Responsible for the construction of portfolios and the choice of financial instruments and guarantees the correct execution of investments

Risk Manager Monitors and controls the investment and risk limits approved by the BoD for each of the investment lines

3) INSURANCE (6% of total AuM and 14% of total recurring fee income) In the perimeter of this area is included, in particular, the business of placing Class 1 insurance policies: SCM SIM has currently brokerage contracts for the distribution of standard insurance products with the following partners: UNIQA, Zurich, Metlife, Pramerica and Reale Mutua. Thus, the Company is a mere holder of insurance policies / proposals to be submitted to the underwriting of clients, as well as collector of the related premiums.

FEES APPLIED SCM’s services are charged to clients with a basic flat fee, complemented by performance fees. Flat fees do not depend on asset allocation or product selection, while performance fees are linked to the effective value creation in the client’s portfolio as follows: . Recurring fees on advisory: on average 0.6% on monthly average net assets value (NAV); . recurring fees on asset management: 0.95% on average of AuM cashed by SCM SIM; . recurring and performance fees on insurance: the products already take into account the commissions for the private banker; . performance fees (9.3% of total fee income in FY 2017): on average 10% for asset management and advisory.

PRIVATE BANKER NETWORK SCM SIM currently operates with 35 private bankers with direct relationship with the client. Each private banker has a portfolio of 20-30 clients for an average AuM/PB of about 30 Eu m.

Fees paid to the Private Banker Network are agreed individually but generally represented by the following: . recurring fees on investment advice and asset management paid to private bankers calculated as a percentage (from 40% up to 65%) of fees paid by clients on the basis of the return achieved according to the “high watermark no reset” logic;

. performance fees paid to the network calculated as a percentage (20%) of the performance fees

paid by clients;

. one-off fees: 40% of the revenues generated from the advisory service (such as portfolio analysis, search of potential investors, financial/strategic advisory to corporates);

. entry bonus: additional payments during the first 24 months in order to incentivise private bankers.

«Young Talent Hub» project Recruiting new professionals is a key growth driver on which the increase in AuM and the quality of for the recruiting of private the customer’s is highly dependent. In and in order to attract junior talents SCM SIM launched, in bankers September 2017, an in-house training program, “The Young Talent Hub" project, which consists in the recruiting of young talents from the best Italian universities, in order to make them become recognized professionals on the market. The Company plans to select 30 new private bankers per year for the next three years. In these first months of 2018, 8 of the first 14 participants of the training program became certified private bankers.

CLIENT BASE SCM SIM currently manages assets of more than 500 customers for a total of 1.1 Eu billion of assets under management (AuM) for an average of about 2 Eu m per client.

The average customer are High Net Wort Individuals with large and diversified portfolios.

Top 10 clients/families represent 23% of total fee income. With regard to customer segmentation, the breakdown is the following: . < 0.5 Eu m = 60% of clients; . < 0.5 Eu m < 2 Eu m = 24% of clients; . > 2 Eu m = 16% of clients.

11 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

STRATEGY Internal growth . Consolidation of competitive position, in order to establish itself as a market leader. . Development of Life Planning services, in order to become a reference point for clients and professionals with a 360 degree approach to wealth management and thereby becoming clients main interlocutor in all life choices. . Expansion of private banker network through recruitment of senior professionals and junior talents from the internal “The Young Talent Hub” program. . Widening of product offer: SCM recently launched “Stable Return”, the first SICAV branded SCM SIM. . Reinforcement of the Investment Area, with focus on asset management business unit.

External growth . M&A transaction of small targets with a complementary business model.

OPPORTUNITIES . Stable expected growth of the industry. . Unique business model base on Independence, Transparency and No conflict of interests in line with UK best practice. . MiFID II compliant: since its authorization in 2010, SCM SIM has adopted a business model that “No rebates” (the Company does not receive fees from issuers, but only from customers). . Management team with long experience in the financial industry. . Skilled private bankers’ team with financial university degree and highly trained. . Internal recruitment program.

MAIN RISKS . Dependence on financial market performance . Regulatory environment. The Company operates in a highly regulated market, where its products are strongly impacted by changes in the current legislation. . Concentration risk due to small number of clients and private bankers: top 10 clients/families represent 23% of total fee income and top 5 private bankers count for 74% of total AuM and 62% of total fee income) and dependence on few key figures. . Reputational risk by customers, shareholders, investors or Supervisory Authorities (e.g. privacy violation). . Low free float and stock liquidity.

OWNERSHIP SCM SIM is owned by HPS Holding Partecipazioni Societarie Srl (Antonello Sanna), which currently holds overall 88.6% of outstanding shares. The share capital subscribed and paid up is 1,909,880 Eu, made up SCM SIM is owned by HPS by n. 1,909,880 ordinary shares without nominal value. Holding (Mr. Sanna) There are no shareholders’ agreement between SCM SIM shareholders. Free float is 11.4% According to Borsa Italiana definition, free float is 11.429%.

Shareholder N° of shares %

HPS Holding Partecipazioni Societarie Srl 1,691,600 88.571%

Other investors (< 5%) 218,280 11.429%

Total 1,909,880 100.000%

Source: Company data as of April 18th, 2018

12 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

GOVERNANCE AND KEY List vote: 10% of share capital. PEOPLE The Board of Directors has 7 members, none of them is Independent. Total gross annual remuneration of the BoD has been set at 210,000 Eu. 7 Board members Antonello Luigi Sanna – Co-founder, Chief Executive Officer (CEO) and General Manager He worked for 19 years in the Generali Group, first in the sales division and later in the training area. In 1998 he moved to Prime Consult SIM SpA, acquired by the Generali Group. In 2000 he became Commercial Director of Altinia, SIM of Alleanza Assicurazioni and in 2003, following the merger of Altinia in Banca Generali, he assumed the role of North East Territorial Director, which had about 500 financial advisors and 4 Eu billion AuM. In 2005 he took over the Sales Department of Banca della Rete SpA, which had 450 promoters and around 1.4 Eu billion AuM (2.5 Eu in 2008). In 2007-2008 he was Board Member of Sara Life SpA. In October 2008 he founded HPS Holding Partecipazioni Societarie Srl, of which he is CEO and in March 2009 he founded SCM SIM, of which is CEO and General Manager.

Roberto Santoro – Co-founder and Wealth Manager He is Chairman of the BoD of HPS Holding. He currently holds the role of Wealth Manager with particular attention to asset protection and generational change. In the past he was Area Manager of Milan and Bergamo on behalf of Banca Sara Private SpA and began his career in finance in 2001 at Banca Mediolanum. Since 2016 he has also been Chairman of Awe Sport Srl, a sports marketing company, and Director of Sport Invest Management Ltd, a holding company based in London.

Francesco Barbato – Co-founder, Board member, Partner and Head of Sales He is financial consultant since 1994, beginning his career in the SanPaolo-IMI Group. In 2006 he moved to Rome’s Telecom-Bank project, which after the acquisition by the ACI Group took the name of Banca Sara. In 2009 he started SCM SIM as a co-founder with Antonello Sanna. Today he holds the position of Head of Sales and he’s a member of SCM SIM’s Board of Directors.

Lorenzo Guidotti – Board member, Partner and Head of Wealth Management From 1995 for two years he worked in the London and New York offices of Merrill Lynch International. In 1999 he was Asset Manager for Schroder Italia SIM SpA and in 2000 he worked at the European Government Bond Desk of Cantor Fitzgerald Ltd in London. Since March 2000 he held the position of Relationship Manager for Institutional Clients in Banca Intesa. From 2002 until 2005 he was Head of Sales Institutional Clients at the Milan office of ABN AMRO Asset Management, while from 2005 to 2008 he was Vice President of the Global Wealth Management Team of Merrill Lynch in Milan. From 2008 to 2010 he served as Director, Senior Advisor and member of the Key Client Top End Group at UBS. Since December 2010 he has been a partner, Board Director and Head of the Wealth Management and Family Office of SCM SIM.

Riccardo Farisi – Co-founder From 1993 to 1997 he worked in the treasury of Chemical Bank and National Westminster Bank of Milan. In the following 9 years he worked in Capital Market in Milan and in Morgan Stanley as a manager of private clients' portfolios for Italy. He later moved to London and worked as a European manager for private clients' bond portfolios, managing approximately 10 Eu billion and joining the Executive Investment Committee. In 2005 he joined Merrill Lynch as Vice President and together with Lorenzo Guidotti he created a desk in JV with the Capital Market and Investment Banking of Merrill Lynch to follow Bank Foundations and Pension Funds. In 2008 he took on the role of Director in UBS in the Key Client team and then moved to SCM in December 2010.

13 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

FINANCIAL PERFORMANCE Since foundation SCM SIM has been experiencing a rapid growth, both in terms of assets under management (2010-2017 CAGR +55%), private bankers (2010-2017 CAGR 19%) and net inflows (2010- 2016 CAGR +18%). As of December 31st, 2017 SIM SIM had 27 private bankers (35 to date) and 1,083 Eu m of assets under management, of which 852 Eu m in consulting, 169 Eu m in asset management and 62 Eu m in insurance. At year end 2017 AuM/Private banker was of 40.1 Eu m, up from 34.9 Eu m in 2016.

N° of private bankers Net inflows (2010-2017) (2010-2017, Eu m)

30 262 27

23 194 17 150 141 134 12 11 99 9 8 51 11

2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017

Fee income has been growing at 2010-2017 CAGR of 54%, driven principally by investment advisory (4.5 Eu) and assets management (1.6 Eu m) in 2017.

Var. % 2017 Eu k – IAS/IFRS FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 vs. 2016

Investment advisory 764 1,031 1,715 2,465 3,082 25.0% General advisory 462 347 947 865 1,460 68.8% Asset management 804 1,255 1,618 1,491 1,588 6.5%

Insurance 641 442 452 1,873 1,072 -42.8%

Performance fees 596 1,014 1,484 248 735 196.8% Fee income 3,267 4,089 6,216 6,942 7,937 14.3% Fee income /AuM 0.72% 0.60% 0.66% 0.66% 0.73%

Net fees, after deducting fees expenses represented by fees paid to private bankers from fee income, has grown at a 2010-2017 CAGR of 52%, representing 51.1% on fee income at the end of 2017.

Fees income and expenses Net fees (2010-2017, Eu m) (2010-2017, Eu m) Net fees (%)

79% 80% 4.1 7.9 74% 3.9 3.9 6.9 68% 6.2 62% 55% 57% 2.6 2.8 51% 2.4 4.1 3.9 3.0 3.3 3.0 2.3 0.9 1.2 1.3 0.4 0.6 0.6 0.2 0.2 0.3

2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017

Fees income Fees expenses Net fees Net fees/Fees income (%)

Operating costs are mainly represented by Personnel and G&As costs. The Cost/Income ratio has historically been to high to be sustainable in the long run, as operating costs have exceeded or offset net revenues as the Company has a short history and has recently made significant investments aiming at strengthening the organizational structure. In the last two years the P/L also included one- offs relating to the 2016 IPO and the investments in IT and management systems in 2017. Net of these, the Cost/Income ratio would have been of 90.9% and 101.4% respectively in 2016 and 2017.

FY 2015 FY 2016 FY 2016 adj. FY 2017 FY 2017 adj. Fees expenses (2.3) (3.0) (3.0) (3.9) (3.9) Personnel costs (1.6) (1.5) (1.5) (1.7) (1.7) G&A costs (1.7) (1.9) (1.7) (2.2) (2.0) Non-deductible VAT (0.2) (0.4) (0.4) (0.5) (0.5) Total operating costs (3.5) (3.9) (3.6) (4.5) (4.2) Cost/Income ratio -90.4% -98.5% 90.9% -108.6% -101.4%

14 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

FY 2017 RESULTS In FY 2017 fee income reached 7.9 Eu m, up from 6.9 Eu m in 2016 (+14% yoy) this growth was mainly driven by recurring investment advisory fees that reached 3.1 Eu m (+25%) and by performance fees (+197%). Management fees grew by 7% and reached 1.6 Eu m. However in terms of AuM and net fees, the growth trend slowed a bit with a +3.4% and +3.0% yoy growth respectively.

Fees expenses were 3.9 Eu m, up by +29.2% vs. FY 2016 due to to higher pay-out for private bankers with high AuM. As a consequence, net fees reached 4.1 Eu m (+3.0% yoy), equivalent to 37 bps on AuM (38 bps in FY 2016) and 51.1% on fee income.

After small amount of interest income, in FY 2017 brokerage margin grew to 4.1 Eu m vs. 3.9 Eu m in 2016 (+4.4% yoy).

Operating costs totalled 4.5 Eu m, up by 15.2% vs. FY 2016 after an increase in personnel costs from 1.5 to 1.7 Eu m (+12.2%) due to higher variable remunerations in 1H 2017 and non-deductible VAT that went from 0.4 to 0.5 Eu m (+22.4%). The result also included one-off expenses from the upgrade of back-office and IT update, a new management and invoicing software.

At the beginning of 2018, the industry (MiFid II independent financial advisors) saw change in tax policy following a communication by the Italian Tax Authorities ruling that that services are subject to VAT fees, representing a discontinuity vs. previous years. Therefore, from January 3rd, 2018 SCM SIM started to apply VAT on the MiFID advisory with some difficulty in communicating with customers, quickly filed.

After write-backs, especially on tangible assets (40 Eu k), and other operating income of 125 Eu k, operating result was -273 Eu k, vs. +66 Eu k in FY 2016.

Net result negative of -315 Eu k vs. the break-even reached in FY 2016 (+7 Eu k).

In FY 2017 net working capital increased by 0.7 Eu m to 2.4 Eu m. NWC is mainly composed by receivables from customers for commissions to be collected (1.7 Eu m vs. 1.4 Eu m in FY 2016), receivables (0.5 Eu m vs. 0.3 Eu m in 2016) and payables (stables at -0.5 Eu m) to private bankers for advance commissions paid and net fiscal assets (0.7 Eu m).

At year-end 2017, the Company was cash positive for 1.4 Eu m, down from 2.3 at year end 2016. Total Equity/Total Assets ratio remained above 70%.

In FY 2017 Capex were mostly dedicated to brand awareness, new clients engagement and recruiting of new private bankers.

Eu k – IAS/IFRS FY 2014 FY 2015 FY 2016 FY 2017 AuM 683 947 1,047 1,083 Fee income 4,089 6,216 6,942 7,937 Fee income/AuM 0.60% 0.66% 0.66% 0.73% Fees expenses (1,289) (2,334) (3,006) (3,884) Net fees 2,800 3,882 3,935 4,054 Net fees/AuM 0.41% 0.41% 0.38% 0.37% Brokerage margin 2,810 3,886 3,932 4,107 Cost/Income ratio -97.5% -90.4% -98.5% -108.6% Pre-tax Profit (Loss) 65 358 66 (273) EBT/Brokerage margin 2.3% 9.2% 1.7% -6.6% Net Profit (Loss) (43) 182 7 (315) EPS (Eu) (0.025) (0.107) 0.004 (0.165)

Eu k – IAS/IFRS FY 2014 FY 2015 FY 2016 FY 2017 Net working capital (NWC) 1,483 819 1,687 2,387 Fixed net assets 88 81 121 124 Funds 58 86 62 157 Net Capital Employed 1,513 814 1,746 2,354 Net financial Debt (Cash) (382) (1,266) (2,344) (1,399) Total Equity 1,895 2,079 4,090 3,754 Sources 1,513 814 1,746 2,354 ROE -2.3% 8.8% 0.2% -8.4% Total Equity/Total Assets 70.3% 60.3% 75.3% 71.2%

Source: Company data (IAS/IFRS)

15 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

2018-2020 ESTIMATES The key growth driver in support of our estimates is the ability to extend the private bankers network. We estimate that SCM will be able to increase its network to about 70 private bankers at year-end 2020. Other assumptions are the following:

. AuM growth at a 2017-2020 CAGR of 21% to 1.9 Eu billion at the end of 2020, thanks to the increase in number of private bankers from 29 to 34 (seniors) and from 6 to 36 (juniors).

. We assume fee income in line with current percentages, as well as a constant breakdown in AuM (80% advisory, 15% asset management and 5% insurance). Performance fees are assumed at 0.07% of AuM, in line with 2017.

. Fees expenses are assumed at 48% of fee income, somewhat lower than in FY 2017 (48.9%), as the Company adopted a new policy regarding junior private bankers that will be employed and hence not paid with commissions.

. Cost/Income ratio in 2020 should reach 88.1% (vs. 108.6% in FY 2017) thanks to operational leverage, benefitting from the Company’s lean overhead structure, savings and reduced non-deductible VAT.

. Significantly lower non-deductible VAT, following the new tax resolution of the Italian Tax office (Agenzia delle Entrate) in November 2017.

. Break-even in 2018 and net profit of 0.6 Eu m in 2020 with an EPS of 0.33 Eu (2016-2020 CAGR of 209%).

. SCM SIM is expected to remain cash positive during the next three years up to 1.8 Eu m in 2020.

. Our estimates do not include M&A activities.

Eu k – IAS/IFRS 2015A 2016A 2017A 2018E 2019E 2020E AuM 947,074 1,046,802 1,082,790 1,260,000 1,523,000 1,924,000 Fee income 6,216 6,942 7,937 8,934 10,486 13,152 Fee income/AuM 0.66% 0.66% 0.73% 0.71% 0.69% 0.68% Fees expenses (2,334) (3,006) (3,884) (4,288) (5,033) (6,313) Net fees 3,882 3,935 4,054 4,646 5,453 6,839 Net fees/AuM 0.41% 0.38% 0.37% 0.37% 0.36% 0.36% Brokerage margin 3,886 3,932 4,107 4,646 5,453 6,839 Cost/Income ratio -90.4% -98.5% -108.6% -102.8% -97.1% -88.1% Pre-tax Profit (Loss) 358 66 (273) 9 308 981 EBT/Brokerage margin 9.2% 1.7% -6.6% 0.2% 5.6% 14.3% Net Profit (Loss) 182 7 (315) 6 200 638 EPS (Eu) (0.107) 0.004 (0.165) 0.003 0.105 0.334

Eu k – IAS/IFRS 2015A 2016A 2017A 2018E 2019E 2020E Net working capital (NWC) 819 1,687 2,387 2,614 2,830 3,041 Fixed net assets 81 121 124 124 124 124 Funds 86 62 157 270 315 381 Net Capital Employed 814 1,746 2,354 2,468 2,639 2,784 Net financial Debt (Cash) (1,266) (2,344) (1,399) (1,312) (1,341) (1,834) Total Equity 2,079 4,090 3,754 3,780 3,980 4,618 Sources 814 1,746 2,354 2,468 2,639 2,784 ROE 8.8% 0.2% -8.4% 0.2% 5.0% 13.8% Total Equity/Total Assets 60.3% 75.3% 71.2% 68.3% 66.5% 66.0%

Source: Company data (IAS/IFRS) for FY 2016-2017 and IR Top Research estimates for FY 2018-2020

16 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

VALUATION We set a target price of 10.24 Eu per share based on a Discounted Cash Flow (DCF) model, implying an upside of 11% and an implicit 2017-2018 Market/AuM multiples of 1.8% and 1.6% respectively. We do not consider appropriate a valuation based on a P/E ratio, as the Company has currently made important investments to boost growth in AuM which in the short term are not reflected in the P&L.

DCF Main assumptions are: . Risk-free interest rate: 2.5%

. Cost of equity (KE): 10.13% . Perpetual growth: 2% Terminal Eu k – IAS/IFRS 2018E 2019E 2020E 2021E 2022E 2023E Value Net Profit (Loss) 6 200 638 1,309 2,052 3,148 + D&A 0 0 0 0 0 0 - Δ NWC (227) (216) (211) (343) (582) (717) - Net Capex 0 0 0 0 0 0 + Δ funds 113 45 67 23 23 1 = Free cash flows to equity (FCFE) (108) 29 494 988 1,493 2,431 Terminal Value (TV) 2,480

Sum of PV 2018-2023 FCFE (Eu m) 3.39 Discounted TV (Eu m) 16.17 Equity Value (Eu m) 19.56 Number of outstanding shares (m) 1.91 Our valuation yields a Target Fair Value per share (Eu) 10.24 Price of 10.24 Eu Source: Company data and IR Top Research estimates as of June 6th, 2018

Since the main value driver is AuM, we run a sensitivity analysis on the target price when changing our AuM estimates. We estimate that any 1% higher/lower growth rate vs. our base estimates, may have a 1.4% impact on DCF valuation.

PEERS ANALYSIS SCM SIM currently trades at large discount (on average 61% for 2018-2020 Market Cap/AuM) compared to a peer group made of both Italian and international players operating in the asset management industry. Net profit Net profit Market Cap AuM 2018E AuM 2019E Country 2018E 2019E (Eu m) (Eu m) (Eu m) (Eu m) (Eu m) ANIMA Holding SpA Italy 1,923 185,224 192,000 162 178 Azimut Holding SpA Italy 2,106 47,329 50,907 187 210 Banca Generali SpA Italy 2,536 57,287 62,233 219 244 Banca Mediolanum SpA Italy 4,408 79,486 84,476 352 385 Ashmore Group Plc UK 3,148 78,157 87,378 174 197 GAM Holding AG Switzerland 2,047 147,171 155,269 151 173 Janus Henderson Group PLC UK 5,455 327,519 340,166 495 515 Julius Baer Gruppe AG Switzerland 11,345 363,544 388,685 784 863 Jupiter Fund Management Plc UK 2,392 57,492 63,467 177 185 Liontrust Asset Management PLC UK 349 13,829 15,571 26 30 Man Group Plc UK 3,461 102,657 113,369 230 273 Schroders Plc UK 10,098 517,778 558,007 702 742 Skarbiec Holding S.A. Poland 45 4,424 4,806 9 11 St. James's Place Plc UK 7,233 115,743 134,463 237 295 Standard Life Aberdeen PLC UK 12,242 705,625 641,038 895 888 Peers median 3,148 102,657 113,369 219 244 SCM SIM Italy 18 1,260 1,523 0.01 0.2

Market Cap/AuM P/E 18E 19E 20E 18E 19E 20E ANIMA Holding SpA 1.0% 1.0% 1.0% 10.4 9.7 9.1 Azimut Holding SpA 4.5% 4.1% 3.7% 12.1 10.8 9.6 Banca Generali SpA 4.4% 4.1% 3.8% 11.5 10.5 9.7 Banca Mediolanum SpA 5.5% 5.2% 4.9% 12.7 11.5 10.3 Ashmore Group Plc 4.0% 3.6% 3.2% 18.2 16.1 14.2 GAM Holding AG 1.4% 1.3% 1.3% 13.5 11.7 11.0 Janus Henderson Group PLC 1.7% 1.6% 1.5% 10.9 10.4 9.8 Julius Baer Gruppe AG 3.1% 2.9% 2.7% 13.6 12.4 11.2 Jupiter Fund Management Plc 4.2% 3.8% 3.4% 13.7 13.1 11.5 Liontrust Asset Management PLC 2.5% 2.2% 1.8% 14.0 12.5 10.2 Man Group Plc 3.4% 3.1% 2.8% 13.8 11.7 10.7 Schroders Plc 2.0% 1.8% 1.7% 14.8 14.1 13.1 Skarbiec Holding S.A. 1.0% 0.9% 6.7 5.7 St. James's Place Plc 6.2% 5.4% 4.6% 24.2 20.6 16.8 Standard Life Aberdeen PLC 1.7% 1.9% 1.8% 12.7 12.5 11.2 Peers median 3.1% 2.9% 2.8% 13.5 11.7 10.8 SCM SIM 1.4% 1.2% 0.9% Discount/Premium to peers -55% -60% -67%

Source: IR Top Research estimates for SCM SIM and FactSet data as of June 6th, 2018 for peers n.a. = not available

17 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

SCM SIM ON AIM IPO Trading Market: AIM Italia – Borsa Italiana SpA -13% from IPO Date: July 28th, 2016 Price: 10.59 Eu Capital raised: 2.22 Eu m Capitalisation: 20.2 Eu m

SHARE DATA (as of June 6th, 2018) Alphanumeric Code: SCM Ticker Bloomberg: SCM IM Ticker Reuters: SCM.MI ISIN: IT0005200248 Outstanding shares: 1,909,880 Share capital: 1,909,880 Eu Price: 9.20 Eu Performance from IPO: -13.1% Capitalisation: 17.6 Eu m Free Float: 11.429% NomAd: EnVent Capital Markets Ltd Specialist: Banca Aletti & C. SpA

18 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

KEY FIGURES Eu m 2015A 2016A 2017A 2018E 2019E 2020E Assets under Management (AuM) 947 1,047 1,083 1,260 1,523 1,924

Profit & Loss Statement Fee income 6.2 6.9 7.9 8.9 10.5 13.2 Fees expenses (2.3) (3.0) (3.9) (4.3) (5.0) (6.3) Net fees 3.9 3.9 4.1 4.6 5.5 6.8 Brokerage margin 3.9 3.9 4.1 4.6 5.5 6.8 Operating costs (3.5) (3.9) (4.5) (4.8) (5.3) (6.0) Pre-tax Profit (Loss) 0.4 0.1 (0.3) 0.01 0.3 1.0 Taxes (0.2) (0.1) (0.04) (0.003) (0.1) (0.3) Net Profit (Loss) 0.2 0.01 (0.3) 0.01 0.2 0.6

Balance Sheet NWC 0.8 1.7 2.4 2.6 2.8 3.0 Fixed assets 0.1 0.1 0.1 0.1 0.1 0.1 M/L Funds 0.1 0.1 0.2 0.3 0.3 0.4 Net Capital Employed 0.8 1.7 2.4 2.5 2.6 2.8 Net financial Debt (Cash) (1.3) (2.3) (1.4) (1.3) (1.3) (1.8) Total Equity 2.1 4.1 3.8 3.8 4.0 4.6

Cash Flow Net Profit (Loss) 0.2 0.01 (0.3) 0.01 0.2 0.6 D&A 0.1 0.1 0.04 0.0 0.0 0.0 Change in M/L Funds 0.03 (0.02) 0.09 0.11 0.04 0.07 Gross Cash Flow 0.3 0.0 (0.2) 0.1 0.2 0.7 Change in NWC 0.7 (0.9) (0.7) (0.2) (0.2) (0.2) Operating Cash Flow 1.0 (0.8) (0.9) (0.1) 0.03 0.5 Capex (0.1) (0.1) (0.05) 0.0 0.0 0.0 Free Cash Flow 0.9 (0.9) (0.9) (0.1) 0.03 0.5 Dividends 0.0 0.0 0.0 0.0 0.0 0.0 Change in Equity 0.002 2.0 (0.02) 0.02 0.0 (0.0) Change in Net financial Debt (Cash) 0.9 1.1 (0.9) (0.1) 0.03 0.5

Per Share Data Current Price € 9.20 Total shares outstanding (m) 1.70 1.91 1.91 1.91 1.91 1.91 EPS 0.107 0.004 (0.165) 0.003 0.105 0.334 DPS 0.00 0.00 0.00 0.00 0.00 0.00 FCF 0.52 (0.48) (0.48) (0.06) 0.02 0.26 Pay-out ratio 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Ratios Fee income/AuM 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% Fees expenses/Fee income (%) -37.6% -43.3% -48.9% -48.0% -48.0% -48.0% Net fees/AuM 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% Cost/Income ratio -90.4% -98.5% -108.6% -102.8% -97.1% -88.1% EBT/Brokerage margin 9.2% 1.7% -6.6% 0.2% 5.6% 14.3% Net Debt/Equity (Gearing) -60.9% -57.3% -37.3% -34.7% -33.7% -39.7% Total Equity/Total Assets 60.3% 75.3% 71.2% 68.3% 66.5% 66.0% ROE 8.8% 0.2% -8.4% 0.2% 5.0% 13.8% Free Cash Flow Yield 5.6% -5.3% -5.3% -0.6% 0.2% 2.8%

Growth Rates Assets under Management (AuM) 38.7% 10.5% 3.4% 16.4% 20.9% 26.3% Fee income 52.0% 11.7% 14.3% 12.6% 17.4% 25.4% Fees expenses 81.1% 28.8% 29.2% 10.4% 17.4% 25.4% Net fees 38.6% 1.4% 3.0% 14.6% 17.4% 25.4% Brokerage margin 38.3% 1.2% 4.4% 13.1% 17.4% 25.4% Pre-tax Profit (Loss) n.m. -81.6% n.m. n.m. n.m. 218.7% Net Profit (Loss) n.m. -96.2% n.m. n.m. n.m. 218.7%

Source: Company data (IAS/IFRS) for FY 2015-2017 and IR Top Research estimates for FY 2018-2020 n.m. = not meaningful

19 SCM SIM FIRST COVERAGE – June 7th, 2018 6:00 p.m.

DISCLAIMER

UPDATES This Research is the first coverage made by IR Top Consulting S.r.l. (IR Top) on SOLUTIONS CAPITAL MANAGEMENT SIM (the “Company”). Update frequency might depend on circumstances considered to be important (corporate events and changes of recommendation, etc.) or on further advisory commitment. Opinions and estimates of this Research are as the date of this material and are subject to change. Information and opinions have been obtained from sources public and believed to be reliable, but no warranty is made as to their accuracy or correctness. Past performances of the Company are not guarantee of future results.

VALUATION METHODOLOGY (HORIZON: 12M) IR Top obtained a fair value using different valuation methodologies including Discounted Cash Flow method and Multiple-based models. Detailed information about the valuation or methodology and the underlying assumptions and information about the proprietary model used is accessible at IR Top premises.

RESEARCH TEAM Luisa Primi, (Senior Analyst, AIAF Associated) Gianluca Mozzali, (Analyst) Claudia Zolin, (Analyst) Chiara Cardelli, (Researcher) No other people or companies participated or anyhow contributed to the Research. Neither the members of the research team, nor any person closely associated with them have any relationships or are involved in circumstances that may reasonably be expected to impair the objectivity of the Research, including interests or conflicts of interest, on their part or on the part of any natural or legal person working for them, who was involved in producing the Research.

INTERESTS INVOLVED AND CONFLICTS This document has been prepared by IR Top, Partner Equity Markets of Italian Stock Exchange, part of LSE Group, on behalf of the Company according to a contract, under which IR Top undertook to prepare this report expressing only independent, fair and balanced views on the Company. The fees agreed for this Research do not depend on the results of the Research. This Research has been disclosed to the issuer to which the Research, directly or indirectly, relates before its release. It is incumbent on the Company to provide timely and constructive feedback on draft Research prior to publication. It is IR Top’s sole discretion as to whether comment and feedback from the Company is incorporated into the Research prior to publication and where it is, a further iteration to the draft will be sent to the Company for comment. IR Top is also engaged in investor relations services in the interest of the Company and might occasionally be involved in other consulting activities intended to increase the value of the Company. In any case, Chinese Walls and other information barriers are in place to avoid the exchange of confidential information between the Equity Research Department and other services areas; employees and advisors involved in such services have restrictions preventing them from the access to confidential information that can not be published. IR Top restricts research analysts from performing roles, which could prejudice the independence of their research. In particular: - they are permitted to attend and speak at widely attended conferences or other widely attended events at which IR Top colleagues and clients, among others, may also be present, provided that their independence may not be affected. These widely-attended conferences/events may include some investor presentations by clients of investor relations services. - Analysts are also permitted to attend and speak at conference calls or meetings between analysts and bankers, investors or customers in which are discussed Research reports already published or general view on specific sectors. In such cases, at the start of that meeting, bankers, investors or customers need to be clarified that the discussion cannot involve the communication of privileged information to the analyst as the analyst would be prohibited from producing new research report on the companies whose privileged information has been disclosed. Members of the Research Team do not receive salaries, commissions, bonuses or any other form of compensation based upon specific investment banking transactions or securities’ performances. IR Top and the members of the Research Team do not have any further interest or conflict of interest directly or indirectly related with the Research, the Company or the securities, that may reasonably be expected to impair the objectivity of the Research. There are no other interests or conflicts of interest of any person belonging to the same group of IR Top that are: (a) known, or reasonably expected to be known, to the persons involved in the production of the recommendation; or (b) known to persons who, although not involved in the production of the recommendation, have or could reasonably be expected to have, access to the recommendation prior to its completion. In any case, as a general Policy, nobody of the Research Team nor IR Top is allowed to have a financial interest in the securities of the client company or serve as an officer, director or advisory board member of the client company. Analysts must not undertake personal transactions on financial instruments that are object of the investment research or that relate to the same industry. Exceptions may be made with the prior approval of IR Top’s CEO in special circumstances such as for disposal of (a) positions already held before the employment or before the implementation of the company policy, or when initiating coverage and (b) positions obtained as a result of the issuer extraordinary activities. By the way, when analysts hold instruments to which Equity Research relates, they are required to disclose their interests in Research reports. Any trades that analysts make must be in line with their recommendation(s), contained in the last published Research. An analyst is prohibited from producing a Research on an issuer if the analyst carries out activities for which he receives compensation from the issuer. If an analyst's household member / relative / relative in-law (within the second degree) serves in such a high capacity for the issuer (i.e. manager or director), the analyst has to inform IR Top’s CEO and the analyst will cease covering the issuer.

POLICY IR Top has in place a “Joint conflict management policy” in order to effectively manage any conflicts of interest, and an “Equity Research Policy”, in order to rule research services in compliance with Parliament Regulation (EU) no.596/2014 and Commission Delegated Regulation (EU) no. 958/2016 on Market Abuse. IR Top has adopted the “Joint conflict management policy” in accordance with best practice regarding “information barriers” to restrict the flow of information to prevent the misuse of information and/or prevent any conflicts of interest arising from other activities of IR Top. A copy of these policies is available to the recipient of this Research upon making a request to IR Top by e-mail.

DISCLAIMER This report has been prepared solely for information purpose and is not intended as an offer or solicitation with respect to the purchase or sale of any financial products. It should not be regarded as a substitute for the exercise of the recipient’s own judgment. IR Top does not accept any liability for any direct, consequential or indirect loss arising from any use of material contained in this report. This document may only be reproduced or published together with the name of IR Top. Opinions and estimates in this Research are as at the date of release and are subject to change without notice to the recipient. Information and opinions have been obtained from sources believed to be reliable, but no representation or warranty is made as to their accuracy or correctness. Past performance is not a guarantee of future results. The investments and strategies discussed in this Research may not be suitable for all investors. In any case, you should consult your investment advisor. This document is intended for distribution only to E.U. “qualified investors” and to “qualified counterparties” resident in Italy, within the meaning of article 2(1)(e) of the prospectus directive (directive 2003/71/EC) and Consob Reg. 16190, as subsequently amended and supplemented; its distribution in USA, Canada, Australia, Japan is not allowed. In Italy, this document is being distributed only to, and is directed at qualified investors within the meaning of article 100 of legislative decree no. 58 of 24 February 1998, as amended, and article 34-ter, paragraph 1, letter b), of Consob regulation on issuers no. 11971 of May 14, 1999, provided that such qualified investors will act in their capacity and not as depositaries or nominees for other shareholders, such as persons authorized and regulated to operate in financial markets, both Italian and foreign.

DISTRIBUTION In the United Kingdom, this document is not for distribution to persons that would be defined as private customers under rules of the FSA; it is for distribution only to persons who: (i) have professional experience in matters relating to investments falling within article 19(5) of the financial services and markets act 2000 (financial promotion) order 2005 (as amended, the “financial promotion order”), (ii) are persons falling within article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the financial promotion order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the FINANCIAL SERVICES AND MARKETS ACT 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This document is not addressed to any member of the general public and under no circumstances should this document circulate among, or be distributed to (i) a member of the general public, (ii) individuals or entities falling outside the definition of “qualified investors” as specified above or (iii) distribution channels through which information is or is likely to become available to a large number of persons.

IR TOP CONSULTING SPECIFIC DISCLOSURES We disclose that IR Top acts as Investor Relations and Financial Communication advisor for the Company.

IR Top S.r.l. Via C. Cantù, 1 – 20123 Milan Telephone +39 02 45473884/3 [email protected] www.irtop.com